Institute of Internal Auditors president and CEO Richard Chambers has released a book on disruption as a new IIA report examines how the internal audit profession is coping with COVID-19.
Chambers’ new book, Agents of Change: Internal Auditors in an Era of Disruption, co-authored by IIA content director Robert Pérez,
taps into more than four decades of learning, observation and experience, as he gets set to depart the IIA at the end of this month after 12 years of leading the group. In his book, Chambers explains the necessary steps for practitioners to improve processes, skills and their mindset.
The internal audit profession has experienced a great deal of disruption in the past year due to the pandemic, which has forced many auditors to work remotely from home without direct access to company personnel and records back in the office. The IIA’s latest annual report on The Pulse of Internal Audit, which was also released this week, found differences in various industries. In the health care and social assistance sector, 80 percent of respondents from such organizations rated the pandemic’s impact as “extensive” for the overall organization, but only 37 percent rated it that way for the internal audit function. Only 18 percent of respondents from financial and insurance organizations rated COVID-19’s impact as minimal for the overall organization, but more than twice as many (41 percent) rated it as minimal for the internal audit function.
“The obvious finding is that it has had an impact on internal audit, particularly how internal audit functions are resourced,” Chambers told Accounting Today. “We saw that a significant number had seen their budgets reduced, and there were staffing reductions in a number of internal audit departments. That’s the financial aspect of the crisis that was impacting internal audit departments. Some of them clearly have struggled through this pandemic. And it’s happening at a time where there’s probably more risk than ever that organizations are facing. Now we’re trying to address that risk and many internal audit departments have fewer resources.”
In his book, Chambers portrays how internal audits can act as “agents of change” at their organizations, It’s the final installment in a series of books that Chambers has written while helming the IIA exploring the characteristics of what internal auditors should aspire to be in their profession and arrives in the midst of the pandemic that is forcing organizations to adapt how they function.
“It’s become evident in recent years that internal auditors can really add value in their organizations and their companies when they serve as catalysts for transformational ideas so that we’re not just there to tell people what they get wrong,” said Chambers. “We’re not just there to say this didn’t work well, but instead we’re able to point them in directions that would allow the organization to enhance value.”
For the book, Chambers and the IIA staff talked with internal auditors about the active roles they play in organizations. “We define ‘agents of change’ in the book as those internal auditors who are catalysts for transformational change that not only protects value, but enhances or creates value in their organizations,” he said. “To me, if I think about a hierarchy or a maturity path for internal auditors, that’s a step beyond a trusted advisor, because a trusted advisor is someone who is there to provide you insight and advice. But they don’t necessarily worry or obsess about making sure that you’re able to take the things they do and grow the value or help the organization become more successful. All agents of change probably are good trusted advisors, but not all trusted advisors are agents of change because some people are just content to give you their ideas and their advice, but they’re not really focused on how that’s going to grow and enhance the organization.”
At the IIA, Chambers has recently taken up the cause of internal auditors at the Navy after learning of plans to reduce their personnel by the Biden administration by around 200 people. Earlier this month, the IIA sent the administration a letter expressing “deep concern” over a proposal that would “effectively demolish” the U.S. Navy’s Internal Audit Service through a 70 percent budget reduction. The budget cut, proposed during the previous administration and currently under review, would “disproportionately divest crucial audit resources at a time when the risks facing the Navy and our nation are increasing,” according to the letter.
“I feel like that would be a dangerous move,” said Chambers. “I spent 21 years of my career in the Department of Defense audit area, and I’ve never seen anything like what’s being proposed as far as the magnitude of it. I think what it will do is that it will expose the Navy to potential risks that it’s never really had to address before without audit coverage.”
Chambers is preparing for the end of his term as IIA chief, working closely with Anthony Pugliese, the outgoing president and CEO of the California Society of CPAs, who will be taking over from him in less than two weeks (see story). “It’s coming fast,” said Chambers. “The transition is going well. Anthony and I have worked well together these last few weeks, and I am preparing to hand off the baton to him in the next few days. And then he will be fully in place as the president and CEO here on April 1. I’m confident that he is ready for the job and will do a great job.”